Tomtom Nv Unsp/Adr

Good afternoon, everyone, and welcome to our conference call. On today's call, we will discuss the operational highlights and financial results for the third quarter of 2026 with Mike Schoofs and Taco Titulaer. Mike will begin with an update on our strategic and operational developments. Taco will then provide further insight into our financials and an updated outlook. After their prepared remarks, we will open the line for your questions. As always, please note that safe harbor applies. And with that, Mike, let me hand it over to you.

Thank you, Claudia. So good afternoon, everyone, and thank you for joining our call. So I'll begin, as Claudia said, with a strategic and operational update on progress during the quarter before I hand over to Taco. So today we announced changes that sharpen our focus on the markets where we see the strongest opportunities for growth. So we see significant growth potential in two specific industries, which is automated driving and location intelligence. Now let me start with automated driving. So there, AI is helping us to innovate faster to support higher levels of vehicle automation by also having built that on a foundation which is highly scalable. In location intelligence for enterprises, AI is making it easier for customers to access our location data and derive insights from it, that intelligence layer. So to capture these opportunities, we have reorganized TomTom around three divisions. So the first is automated driving, the second is location intelligence for enterprises, and the third is navigation. And with this structure we want to bring a better and sharper focus on these areas and allowing the three divisions to build on a shared product foundation from maps, location technology, and AI capabilities. The third division navigation remains the backbone of TomTom. It's where most of our revenue comes from. We have this strong backlog where customers rely on us to deliver high quality location technology every day. On the organizational design, by reducing management layers and bringing decision making closer to the execution and to the outcome, we will be able to respond faster to customer needs and accelerate innovation. Unfortunately, these changes also impact Approximately 200 roles and we are committed to supporting these colleagues and our colleagues in affected throughout the transition Overall these changes are designed to make Tonto more focused faster and more scalable and this will help to expand our customer base strengthen our position in growing markets and drive sustainable growth over time Now I would also like to give you a bit of an update on the commercial and the product We continue to extend the role of our location technology in AI applications. Earlier this week, we announced a cooperation with DeepRoute AI, covering our joint efforts on AI-based automated driving. We have integrated TomTom location data into DeepRoute's AI automated driving stack and algorithm. The combined solution uses our location intelligence alongside the sensor information provided the road layouts, local rules and wider context needed to plan ahead and navigate unfamiliar roads. The integrated demonstration vehicle is being showcased in the Paris Motor Show and driven by existing partners and new partners. The second thing I would like to stress is that we expanded our partnership and our collaboration with Microsoft further. bringing TomTom location intelligence to Microsoft Fabric and Microsoft Foundry through Microsoft IQ sharing preview. And this actually allows enterprises to combine our geospatial data with their own business data. It enables AI agents to better understand the real world conditions and support more informed decision making. So that's the second one which is quite important and that lines up in the location intelligence for enterprises. And also the product side, we launched TomTom Maps MCP server in the cloud connected directory. So this makes our maps routing and real-time traffic capabilities more easily accessible to AI and assistant agents. And it also enables location-aware experiences without the need for complex integration. So it accelerates that adoption of location data and location intelligence. Now together these initiatives strengthen our position as a provider of AI-ready location intelligence and really drive into our future strategy where we want to accelerate in those ecosystems. So overall, we are really sharpening our focus on the areas where we see the strongest growth and we have a differentiating factor as well based on our unique position on our independent structure, our technology stack, and our data which is auditable and traceable in highly governed industries. We are organizing the company to accelerate innovation and deliver faster to our customers, future and existing. And at the same time, we're making our location technology easier to access and integrate into AI applications and agentic applications. And the commercial progress we made during the quarter demonstrates the relevance of our technology across a broad range of use cases. Now with that, I'll hand over to Taco who will take you through the financial results and outlook in more detail. Thank you.

Thank you, Mike. I'll cover our financial performance and our outlook after which we'll take your questions. In the third quarter of 2026, group revenue was 129 million, a 6% decrease versus last year. This decline was in line with expectations and guidance. Let me briefly break down our top line performance. Automotive revenue came in at 78 million for a quarter, that's a 2% decrease year-on-year. Automotive operational revenue was 68 million, down 19% year-on-year. The decline was partly driven by a phase-out of customer contracts. In addition, the same quarter last year benefited from relative reports received relating to earlier periods, creating a higher comparison base. Enterprise revenue was 37 million, down 4% year-on-year. The decline was mainly due to the phase-out of a customer contract partly offset by new customer wins. Taken together, our location technology segment generated $150 million. Consumer revenue was $40 million, down 24% year-on-year, reflecting the continued contraction of the P&B market and memory supply constraints. Growth margin improved to 90% up from 89% last year. This increase was driven by the higher proportion of high margin content and software revenue in our mix. Operating expenses were 111 million, a reduction of 3 million compared with the same period last year. As a result, our operating result was a profit of 6 million. Our operating margin was 5% and came in above the level we anticipated reflecting strong cost discipline. Free cash flow excluding restructuring payments was $8 million. Net cash movement for the quarter was an inflow of $5 million compared with an inflow of less than $1 million in the same quarter last year. We ended the quarter with a net cash position of $239 million with no outstanding borrowings. Let's look at the outlook for the full year. Looking ahead, we are updating our full year 2026 outlook. Revenue development is progressing in line with expectations, while profitability continues to benefit from strong gross margins and disciplined cost control. We are narrowing our revenue range and increasing our operating margin outlook, reflecting our performance year-to-date and the low expected salary cost in the fourth quarter, resulting from the organizational realignment announced today. For 2026, we now expect group revenue of 505 to 530 million, with location technology revenue of 450 and many more. The operating margin of around 4% includes a restructuring charge of approximately 50 million, which we expect to record in the fourth quarter. Excluding this one-month charge, we expect our operating margin to be around 7% for the full year. We estimate the analyzed savings for the organizational realignment at approximately 21 million. For 2027, we reiterate our expectations of location technology revenue growth supported by increasing growth margins and a more efficient goal space. We are well positioned to deliver profitable growth. And with that, we're ready to take your questions. Operator, please start the Q&A.